Fluent Essays

This week, you have read about entrepreneurship in a global economy. For your written assignment this week, complete a case study of the organization you work for (use a hypothetical or “other” organization if more applicable) that will address the following prompts: • Describe the organization’s environment, and evaluate its preparedness to go global, if not already, and its strategy for staying global if it is. Research other companys strategy for going global and explain if this will or will not work for your company. Make a recommendation for a global strategy in the organization, including a justification for your recommendations.Submit your midterm research paper as a single document. Your paper should meet the following requirements: Be approximately four to six pages in length (1200-1800 words), not including the required cover page and reference page. Follow APA6 guidelines. Your paper should include an introduction, a body with fully developed content, and a conclusion. Support your answers with the readings from the course and at least two scholarly journal articles to support your positions, claims, and observations, in addition to your textbook. The UC Library is a great place to find resources. Be clearly and well-written, concise, and logical, using excellent grammar and style techniques. You are being graded in part on the quality of your writing. kresselhenrylen_2012_7implementinginformat_entrepreneurshipinthe.pdf kresselhenrylen_2012_5speedingvoiceanddata_entrepreneurshipinthe.pdf innovation_global_economy.pdf global_information_technology.pdf Unformatted Attachment Preview 7 Implementing information technology across the globe Copyright 2012. Cambridge University Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Technology companies and global investors are beating a path to Israel and finding unique combinations of audacity, creativity and drive everywhere they look.1 If you mention a successful startup called Ness Technologies, there is a good chance that a US listener will assume it is one of those high-technology Silicon Valley companies. That listener would be mistaken. Ness Technologies is a multinational information technology (IT) services corporation, created in Israel in 1999. It is also the first company in this book that does not have its headquarters in the US. This chapter will examine how the Israeli entrepreneurs who founded Ness dealt with the challenges of a global marketplace. Within five years of its founding, this Israeli startup became a leading company in its field with operations in Asia, Europe, and the Americas. Its rapid rise to prominence has fully justified its name, which means “miracle” in Hebrew. It did so by melding subsidiaries in countries with cultures as diverse as Bulgaria and Thailand into a global corporate culture, with a common set of goals and expectations that was held across national boundaries. Demand for IT services reshapes the world Ness Technologies is a provider of IT services to other companies. As such it didn’t “invent” any basic technology. Like Ronald Stanton’s Transammonia, its innovations took the form of a new 1 D. Senor and S. Singer, Start-up nation: The story of Israel’s economic miracle (New York: Twelve, Hachette Book Group, 2009), p. 11. This book contains a wealth of information about the Israeli environment for new business building. 172 EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS AN: 465765 ; Kressel, Henry, Lento, Thomas V..; Entrepreneurship in the Global Economy : Engine for Economic Growth Account: s8501869.main.ehost Demand for IT services reshapes the world 173 business model and new approaches to international service. Unlike Transammonia, however, Ness operated in an industry characterized by the most rapidly advancing technology in history. Even those who lived through the rise of the computer can hardly believe how quickly and profoundly digital data processing has changed the way the world does business. In just twenty years, between 1980 and 2000, corporations replaced the river of paper that had carried business forward for centuries with a stream of digital information flowing through wires. Computers and associated software flooded into offices to handle all aspects of business, including payrolls, supply management, customer billing, and everything in between. This transformation, from a paper-trail business model to a digitally wired one, required enormous investments in successive generations of hardware. Processors evolved from big, centrally located machines, accessed with “dumb” terminals, to networked business computers. When low-cost PCs became available most employees got their own. As computers proliferated in every aspect of business, enterprises faced an urgent need to implement and manage their software and communications infrastructure. To satisfy this need companies began hiring IT specialists to configure and operate their systems. They soon faced a classic supply-and-demand problem. Because of the rapid growth in demand, skilled IT engineers were suddenly in short supply. Predictably, a proliferation of enterprising startups quickly emerged, offering contracted IT services to help companies meet the needs of their computer users. Corporate IT infrastructures continued to grow in complexity as the technology advanced. Companies found they needed specialists to write software, install security systems to control access to data, and install and configure data networks, to name just a few areas of expertise. The arrival of the Internet in the mid-1990s greatly increased the demand for highly skilled IT specialists. IBM was certainly the giant in the IT services industry throughout this period, but it was not alone. Many other companies, EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 174 Implementing IT across the globe both large and small, provided expertise to enterprises that lacked the internal skills to design, build, or maintain their IT infrastructure. Yet demand for IT specialists kept rising – as did the amount of concern about their cost. Companies went looking for other sources of supply. They came to the realization that it was possible to have enterprise software developed and configured at lower cost by skilled engineers in countries with lower wages, such as India. Thus was born the offshore IT service model, with India at its center. Of course, the outsourcing of jobs from countries like the US and Britain to what used to be thought of as “third-world” countries attracted a lot of negative attention. But India’s ascendancy as a nexus of outsourced IT services revealed a striking new truth about the developing world: countries that were once considered economic and technological backwaters were rapidly catching up to Europe and the US, especially where IT was concerned. They too had IT infrastructure problems that needed solutions – and they had skilled engineers who could provide those solutions. In fact, in every part of the world where demand existed, an army of startups was emerging to provide IT services. Most of them were satisfied to remain small regional companies focused on industry sectors important in their geographies. Some Indian startups, however, built technical teams in India and sales organizations in the US and Europe to solicit business. A few startups there and elsewhere ultimately emerged as large multinational companies. Ness Technologies was one of these. Israel: Technology company incubator Ness, of course, was different. It was an Israeli company, which prompts the question, why start such an ambitious venture in Israel? Israel is a small country with a population to match: only 7.5 million people in 2011. That is quite a contrast to India, which has a population of 1.2 billion. And it is a relatively new player in technology. Not so long ago oranges and flowers were key Israeli exports, not software or medical products. Today the country can boast a remarkable EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use Demand for IT services reshapes the world 175 record of technical innovation and entrepreneurship. It was ranked fourteenth out of 125 countries in the 2011 Global Innovation Index, published by INSEAD.2 Its economic clout extends far beyond what its small size would predict. In 2009 Israel exported goods and services valued at 35 percent of GDP, ranking it above Germany (34 percent), China (24 percent), and India (13 percent). Israel developed as a technology powerhouse largely due to the need to ensure its national survival. It took a sudden French boycott of defense sales during the 1967 war, after years of close collaboration with French industry, to wake the country up to its vulnerability. Because of the boycott, the government decided that it could no longer rely on the importation of strategic defense products. It launched a massive program to foster internal industrial development and build a technology-based economy. Trained engineers and scientists are the basis for any technology sector, and Israel was fortunate in having the resources to develop engineering talent. • There are several outstanding universities, plus many private colleges. • The country has benefited from the immigration of many engineers and scientists, particularly from the former Soviet Union. • Young engineers can gain practical experience in technical organizations run by the Israel Defense Forces, which employ young people during their mandatory military service. It is worth expanding on this last point. Israel Defense Forces draftees take rigorous tests for the opportunity to work on defenserelated product development. When those who are selected leave the service they are well qualified for an industrial career. Many either start companies of their own or join existing startups. Israel’s focus on education and training has produced an unusually talented and experienced pool of software and hardware engineers. Their presence has attracted many major foreign 2 www.globalinnovationindex.org/gii/main/analysis/rankings.cfm, accessed September 16, 2011. EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 176 Implementing IT across the globe corporations to open engineering centers and product development facilities in Israel, among them, Intel, Motorola, and Siemens. In addition to its support of technical education and training, the government has taken an active role in encouraging the creation of innovative new companies. The Office of the Chief Scientist of Israel provides modest amounts of seed capital to technology start­ ups that are deemed to be promising. Companies that survive the seed stage then seek funding from venture capital funds or large corporations. There is a healthy venture capital industry in Israel. In 2009 Israel ranked first in venture capital investment as a percentage of GDP at 0.43 percent. This compares, for example, to 0.08 percent in China and 0.2 percent in the US.3 Most Israeli startups eventually get acquired, but some remain independent and become publicly traded companies. Over 100 Israeli-originated firms are listed on US stock exchanges, the largest number of any foreign country. Many others are listed on the Tel Aviv exchange. With a deep pool of engineering talent, an abundance of entrepreneurial spirit, a solid legal system, and a history of intellectual property protection, Israel is a good place to build innovative businesses or develop products for the global marketplace. So when Warburg Pincus encountered an opportunity to invest in an Israeli company, we paid attention. How Ness Technologies began Our opportunity to invest in Ness Technologies came through Morris Wolfson, an experienced American investor in Israeli businesses, who had acquired a small Israeli IT services company in 1997. He realized that he needed an experienced, professional investing partner to build it into a major company. We were introduced to Wolfson through a mutual friend, and began to discuss the idea of 3 Data from NVCA and EVCA, quoted in C. Dickson and O. Shenkar, The great deleveraging: Economic growth and investing strategies for the future (Saddle River, NJ: FT Press, 2011), p. 181. EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use How Ness Technologies began 177 acquiring several IT services companies in Israel and merging them to create the foundation for a global business. We had been investing extensively in IT businesses in a number of countries. Given what we had heard of the business climate in Israel, we thought this was an idea worth exploring. So we went on a fact-finding trip there. Our first step was to meet Raviv Zoller. A former officer in the Israeli Navy, Zoller was a certified public accountant and the founder of an investment bank focused on technology businesses. He was familiar with the IT industry and was working with Wolfson. He would be the driving entrepreneur of the new venture, morphing from investment banker to CFO of Ness and finally to its CEO. Zoller had identified five companies with outstanding technology and established market positions, one of which had already been acquired. He believed that these firms, consolidated under a unified management, would provide the core of a leading IT services company in Israel. Once a solid local base was established, international expansion would be a real possibility. We visited each of the candidate companies, met their managements, and reviewed their projects, capabilities, and finances. Their combined revenues in 1999 were $94 million with a profit of $7.5 million. They were selected because, taken together, they covered many of the most important and valuable IT services, including enterprise networks, custom software development for defense systems, and IT system integration for banks, telecommunications carriers, hospitals, and utilities. Table 7.1 summarizes their size and areas of practice. We then talked to their major customers, who confirmed our favorable impression of the quality of their work and the productivity of their engineering staffs. We were sufficiently impressed that we decided to participate in funding Ness Technologies. Assembling a senior management team was the first step. Over a period of six months we recruited three senior-level executives to launch the company. Aaron Fogel, former Director General of the Israel Ministry of Finance, became the chairman of the board. Yaron EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 178 Implementing IT across the globe Table 7.1 Israeli acquisitions that started Ness Technologies Year No. of acquired Company name Business type employees 1999 Gilad 340 1999 Conthal 1999 Advanced Technology 1999 1999 IPEX IPEX ISI Software d ­ evelopment and system integration Information technology services Software development and system integration System integration Software development 310 650 350 40 Polak, a seasoned and highly respected executive who had built a software company that had gone public on NASDAQ, became CEO. Raviv Zoller became CFO and Chief Operating Officer. Putting the pieces together Merging companies is never easy, but merging five entrepreneurial companies at one time is best qualified as “Mission: Impossible.” The fact that it was done successfully is a tribute to the skills of the management team we had recruited. We felt it was essential to establish a common culture for the new company. That would be difficult to do with employees scattered among five facilities. Hence, the initial step in the integration process was to move most of the 1,690 employees to a single location. Fortunately, attractive office space became available in a new Tel Aviv industrial park, and everybody moved to that facility practically overnight. Moving to nice new quarters was the easy part of integration. It was much harder to decide which managers to retain so we could create a coherent business organization to unify the original companies. As central functions such as finance, personnel, and marketing were EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use How Ness Technologies began 179 staffed and business units were defined, some managers lost their jobs, while others were promoted to greater levels of responsibility. Making such wrenching personnel decisions is always difficult and disheartening. Israeli culture made it more stressful than usual. Israel is a close-knit society. As people’s jobs were either threatened or eliminated, their friends and relatives anxiously sought to talk to me about the situation. They waited for me in the hotel lobby during my frequent visits to Israel. They told me that the people losing their jobs were actually the best people there, and that Ness was starting down a ruinous path. Would I not reverse management’s decision and keep those talented folks in the company? Of course I could do no such thing. The process of integration would work only if the company’s investors backed its management’s decisions. The subsequent progress of the company suggests that they picked the right people. It took just over a year to complete the major consolidation process, after which Yaron Polak left Ness to become a venture capitalist. Raviv Zoller became CEO in mid-2001, just in time to tackle the next phase of the project: leveraging the assembled resources to grow the company’s market share in Israel, in preparation for international expansion. Zoller put new service initiatives in place, built relationships with the biggest potential customers in Israel, and built the Ness brand – all while making the company profitable. Ness had a roster of established customers, but it needed to acquire new ones. It faced fierce competition not just from small companies, but from big multinationals such as IBM and Accenture. It won business on the basis of both quality and price against these formidable opponents, rapidly earning a reputation as a quality vendor. Soon it had emerged as the leader in the domestic market. Zoller also demonstrated considerable promotional talent. He picked former US president Bill Clinton to be the featured speaker at the Ness annual customer meeting, which he had instituted as a brand-building opportunity. Clinton was very popular in Israel, and this event won Ness a great deal of national press coverage. EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use 180 Implementing IT across the globe By 2002 Ness could count many leading Israeli banking, industrial, and defense firms among its customers for IT software and solutions. It had annual revenues of $167 million and a 13 percent market share in Israel, slightly ahead of IBM. It was time to look overseas for growth opportunities. International expansion Ness Technologies was conceived from the start as a global company. Now it had to execute on that vision. Its strategy was to develop an innovative business model for international expansion, particularly into India, that maintained the integrity of regional operations, yet integrated them into a worldwide resource for IT services. There were several ways to penetrate foreign markets. One approach was to establish sales offices in various countries, have them solicit projects locally, and execute the work in Israel. This strategy was rejected. It would take too long for an unknown newcomer like Ness to gain credibility in a new country. Instead, we decided that Ness’s expansion strategy had to be based on the acquisition of well-established IT service companies in our geographies of interest. As known quantities, these companies would make initial market entry easier. We would then enhance their competitive position with technology transferred from Israel. All business is local Given this approach, it was clear that retaining senior management in each of these companies was the key to successful mergers. We knew that acquisition by Ness could hurt a company’s relationships with local industry, utilities, and government agencies. These customers would be concerned about contracting mission-critical IT services to a foreign provider. Therefore, the operating paradigm for the acquired companies was to continue to “look local” while offering, wherever appropriate, Israeli technology as a competitive edge. Each company would continue to have local management, and we would keep the folks EBSCOhost - printed on 1/26/2020 4:20 PM via UNIVERSITY OF THE CUMBERLANDS. All use subject to https://www.ebsco.com/terms-of-use International expansion 181 who had relationships with customers in place on sales and service teams. Since these local companies would be Ness Technologies business units, however, we would standardize operating practices across all of them as much as possible. This included, among other things, training and tech ... Purchase answer to see full attachment